On July 1,2012,Homer,Inc.loaned a customer $10,000 on a 3-month,9% note.
Part A: Show the effect on the accounting equation of the July 31,2012 adjusting entry for interest.Include both account titles and amounts.

Part B: Put an X to indicate each financial statement that is affected by the adjusting entry to accrue interest.
Part C: Would your answer in Part A be different if the note were a $10,000,6-MONTH,9% note,instead of a 3-month note?

Question

On July 1,2012,Homer,Inc.loaned a customer $10,000 on a 3-month,9% note.
Part A: Show the effect on the accounting equation of the July 31,2012 adjusting entry for interest.Include both account titles and amounts.

Part B: Put an X to indicate each financial statement that is affected by the adjusting entry to accrue interest.
  Part C: Would your answer in Part A be different if the note were a $10,000,6-MONTH,9% note,instead of a 3-month note?

Quizplus · Accepted Answer

The Answer of On July 1,2012,Homer,Inc.loaned a customer $10,000 on a 3-month,9% note.
Part A: Show the effect on the accounting equation of the July 31,2012 adjusting entry for interest.Include both account titles and amounts.

Part B: Put an X to indicate each financial statement that is affected by the adjusting entry to accrue interest.
  Part C: Would your answer in Part A be different if the note were a $10,000,6-MONTH,9% note,instead of a 3-month note?